Medicaid debt isn't stopping Maine hospital construction

Maine hospitals are finding room in their budgets for multimillion-dollar construction projects, including a $322 million hospital in Augusta, the Bangor Daily News reports.

Hospitals in Bangor, Augusta and Portland found the capital and loans for major construction projects even though they're owed $484 million in overdue Medicaid payments from the past four years. The construction boom comes as hospitals warn of having to phase out services or lay off workers to cope with the Medicaid debt, the paper notes.

Eastern Maine Medical Center in Bangor, for example, recently resurrected its plans for a $250 million addition, a project the state approved in 2008 but was delayed in part by Medicaid debt--now more than $75 million, according to the paper.

The hospitals also say credit-rating agencies consider them a higher credit risk because of the Medicaid debt, forcing them to pay higher interest rates on loans to finance their construction.

Last year Moody's Investors Service's downgraded a historic $20 billion in nonprofit healthcare debt, compared with a $6.4 billion downgrade in 2011.

Moody's primarily attributed the downgrades to declining patient volume, weak revenue growth and increased debt, as well as hospital management and governance issues. Nonprofit hospitals are particularly vulnerable to downgrades because Medicaid is their largest source of revenue.

To learn more:
- read the Bangor Daily News article

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